TABLE 17-1
the Following Payoff Table Shows Profits Associated with a Set

question 37

Multiple Choice

TABLE 17-1
The following payoff table shows profits associated with a set of 3 alternatives under 2 possible states of nature.
$\begin{array}{llcc} \text {States } &\text { A1 }&\text { A2 }&\text {A3 }\\\hline1&12&-2&8\\2&4&10&5\end{array}$


$\text {where:}$$\quad$$\quad$ $\text {S1 is state of nature 1 }$$\quad$$\text {A1 is action alternative 1}$
$\quad$$\quad$$\quad$$\quad$$\quad$$\text {S2 is state of nature 2}$$\quad$$\text { A2is action alternative 2}$
$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text {A3 is action alternative3 }$


-Referring to Table 17-1, if the probability of S1 is 0.2 and S2 is 0.8, what is the expected monetary value of A1?

• A) 8
• B) 2.4
• C) 5.6
• D) 16

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Definitions:

Machiavelli

Niccolò Machiavelli was an Italian diplomat, philosopher, and writer, often regarded as the father of modern political science. His most famous work, "The Prince," describes the arts and strategies of political power.

"The End Justifies the Means"

A moral principle stating that the outcomes of actions are the only criteria for judging their merits, regardless of the moral nature of the actions themselves.

Social Interactions

The exchanges between two or more individuals, shaping relationships and social structure through communication and actions.

Mutual Influence

The effect or impact that two or more entities have on each other.